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SYDNEY - Oil prices fell yesterday, pulling back from previous session's 2.5 per cent surge, as easing tensions in the Middle East encouraged investors to take profits.
US light crude for December delivery fell 63c to US$95.30 a barrel. US oil rose US$2.44, or 2.5 per cent, on Friday to settle at US$95.93, as robust US jobs data reassured investors that the current credit crunch had not affected the wider economy.
London Brent crude fell 38c to US$91.70.
"The fall is really prompted by profit-taking. Tensions in the Middle East have eased a little bit so that is encouraging investors to cash out," said Mark Pervan, a senior commodities analyst at ANZ Bank.
"The market is so heavily over-bought that prices tend to be very volatile and news-sensitive."
Iraq said on Saturday it was ready to hunt down and arrest Kurdish guerrilla leaders responsible for cross-border raids into Turkey in an effort to avert a major incursion by the Turkish military.
The move has helped to diffuse simmering tensions between Turkey and Iraq, where a border row between the two countries has helped oil's 18 per cent surge in the past month due to fears that a Turkish attack could escalate into a wider regional crisis.
Concerns about tight supplies ahead of the northern hemisphere winter and rising speculator interest have also contributed to oil's recent bull-run.
Oil's fall was also helped by signs of easing tensions between major oil producer Iran and the West.
Iran said on Sunday it welcomed proposals to work with other countries to enrich uranium, but will not accept an offer that requires Tehran to halt its sensitive atomic work.
Saudi Arabia's foreign minister said this week US-allied Gulf states were willing to set up a body to provide enriched uranium to Iran to defuse Tehran's standoff with the West.
Speculators on the New York Mercantile Exchange crude oil market increased their net long positions in the week to October 30, data from the US Commodity Futures Trading Commission showed on Friday.
The rise came as US oil prices hit fresh records last week, driven by concerns about supplies ahead of the US winter and the weaker dollar.
Economic data last week which showed the US economy grew at a brisk 3.9 per cent in the third quarter has also helped to alleviate concerns that the country's energy demand growth would be further hit by a sluggish economy.
- Reuters
